Variation intiate from Contractor?

Thanks sathis

Hi



The value Engineering is process. It is not limited to paper work or written in the book. There are value Engineering workshop (40 hr) needs to conduct during the proposal. The parties exchange their ideas and make an agreement.



Regards



jayaweera

Hi Gayantha,



Even though it is not written specifically in FIDIC book, but if it goes to any arbitration, then definitely he can claim for 50% savings and he can get it.



If you read EIC’s contractors Guide, then it says like this:



13.2 Value Engineering: The red book provides a mechanism through which the contractor is compensated if teh Engineer approves his suggestion in respect of Value Engineering. The Engineer can determine "the reduction (if any) in the value to the Employer of teh varied works taking account of any reductions in quality, anticipated life or operational efficiencies". A more specific provision should be provided to make it clear how the benefits to both parties will be aportioned.



Thats all EIC’s Guide suggest regarding Value Engineering Clause. As far as my knowledge is concerned and case studies I have read, Contractor can Claim max upto 50% of the total savings.



Cheers,



Raviraj

Hi Omer,



As andrew has said earlier, Clause 13.2 is from 1999 Fidic red book. (13.2 --> Value Engineering)



A variation initiated from contractor to add value to a project, won’t come under Variation Clause.



Contractor may claim for 50% of (monetory) savings directly if he saves money by doing value engineering.



Cheers,



Raviraj

I’m looking at 1999 Red Book:



Applicable are Cl 13.1(b) and 13.2 possibly (i) or (ii) or maybe (iv) and note section (c) begins with "IF".

Hi Jayaweera

Actually clause 51 of FIDIC 4th Edition empowers the Engineer to instruct variation order except no variation shall invalidate the contract.



Clause 51 clearly defines that Contractor shall not make any variation without an instruction of the Engineer. Provided that no instruction shall be required for increase or decrease in the quantity of any work where such increase or decrease is not the result of an instruction given under this clause, but is the result of the quantities exceeding or being less than those stated in the Bill of Quantities.



Raviraj can u please elaborate clause 13.2 – value engineering is from which document.



Regards,

Omer

Hi Omer



Mr Omer, The engineer’s approval does not always constitute a variation.



Rgs.

Hi,



In this case, claim is NIL;



but if he might have saved some money, then as per FIDIC, "Contractor may claim half of the saving in contract value of his redesigned post-contract alternative proposal, which was approved without prior agreement of such contract value and of how saving would be shared."



See clause 13.2 - Value Engineering



Cheers,



Raviraj

Should clarify my last short post



Usually NIL additional time or money, but obviously entitled to the original value of the work.

Yes Contractor can propose but can not direct to Engineer. if proposal of contractor is agreed by Engineer then Engineer will instruct for the variation Order.



Regards,

Omer

Hi





Assumed this is FIDIC, and it is a not a variation order issued by the Engineer. Because the Contractor has proposed and the engineer has approved subject to cost saving (like value Engineering). If there is no cost saving the contractor entitlement is original price.







Rds

In my opinion as per FIDIC Contracts, Engineer can only instruct about variation Order.



Regards,

Omer

Usually NIL